We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Science Applications (SAIC) Secures Navy Contract Worth $120M
Read MoreHide Full Article
Science Applications (SAIC - Free Report) recently announced that it has received a $120 million contract from the Naval Supply Systems Command (“NAVSUP”). This contract follows other Naval projects, including a $375 million U.S. Navy contract for Modern Vehicle Fielding Integration and Support, a $80.5 million deal with MK 710 Torpedo System Test Set and an agreement with the U.S. Navy’s Hypersonics Advanced Concepts and Strategic Missions Programs support.
The latest NAVSUP contract is a five-year long, cost-plus fixed-fee agreement. SAIC will continue supporting the Tactical Training Group Pacific (TTGP) Yokosuka, Expeditionary Warfare Training Group Pacific, Carrier Strike Group 15 and TTGP fleet training mission.
Science Applications will use its technical expertise to provide fleet synthetic training, live virtual constructive training and subject matter expert classroom support for warfighting tactics, techniques and procedures through the training modules developed by the government.
Science Applications International Corporation Price and Consensus
Science Applications continues to prioritize the federal government market and aims to increase its market presence. In 2021, 2022 and 2023, almost all of Science Application's revenues, approximately 98%, came from contracts with the U.S. government. SAIC’s main clients include various government agencies, such as the Homeland Security, NASA, the Department of State and the military branches like the Navy, Airforce and Army.
Having the Navy and other federal agencies as major clients stabilizes the business and minimizes revenue fluctuations. Also, the government projects, once sanctioned, generate revenues for several years, adding to the predictability of future revenue streams.
Science Applications also benefits from the higher spending as proposed in the latest federal government budget. The increased budget is expected to accelerate the pace of contract awards, which, in turn, will be beneficial for SAIC’s top-line growth.
Macroeconomic and Competitive Challenges
Science Applications operates in a highly competitive defense, space, intelligence and mission-critical services market that consists of players, including CACI International (CACI - Free Report) , KBR Inc. (KBR - Free Report) and Leidos Holdings (LDOS - Free Report) .
CACI, KBR and Leidos also receive contracts from the Department of Defense, the Department of Homeland Security and other U.S. government agencies, causing a highly competitive environment in this niche industry. The pricing pressure causes low-margin government deals affecting SAIC’s profitability.
Science Applications is also facing headwinds from rising component costs and increasing labor and logistics expenses. Moreover, recession concerns amid the ongoing macroeconomic and geopolitical tensions might lead to softened spending by government agencies. The company’s near-term prospects are weighed down by these negative factors.
Conclusion
Science Applications is receiving a steady flow of deals from government agencies. However, most of these contracts have low margins, which affects its profitability. Intensified competition and softened customer spending amid uncertain microeconomic conditions are other concerns.
Image: Shutterstock
Science Applications (SAIC) Secures Navy Contract Worth $120M
Science Applications (SAIC - Free Report) recently announced that it has received a $120 million contract from the Naval Supply Systems Command (“NAVSUP”). This contract follows other Naval projects, including a $375 million U.S. Navy contract for Modern Vehicle Fielding Integration and Support, a $80.5 million deal with MK 710 Torpedo System Test Set and an agreement with the U.S. Navy’s Hypersonics Advanced Concepts and Strategic Missions Programs support.
The latest NAVSUP contract is a five-year long, cost-plus fixed-fee agreement. SAIC will continue supporting the Tactical Training Group Pacific (TTGP) Yokosuka, Expeditionary Warfare Training Group Pacific, Carrier Strike Group 15 and TTGP fleet training mission.
Science Applications will use its technical expertise to provide fleet synthetic training, live virtual constructive training and subject matter expert classroom support for warfighting tactics, techniques and procedures through the training modules developed by the government.
Science Applications International Corporation Price and Consensus
Science Applications International Corporation price-consensus-chart | Science Applications International Corporation Quote
SAIC Gains From Its Government Client Base
Science Applications continues to prioritize the federal government market and aims to increase its market presence. In 2021, 2022 and 2023, almost all of Science Application's revenues, approximately 98%, came from contracts with the U.S. government. SAIC’s main clients include various government agencies, such as the Homeland Security, NASA, the Department of State and the military branches like the Navy, Airforce and Army.
Having the Navy and other federal agencies as major clients stabilizes the business and minimizes revenue fluctuations. Also, the government projects, once sanctioned, generate revenues for several years, adding to the predictability of future revenue streams.
Science Applications also benefits from the higher spending as proposed in the latest federal government budget. The increased budget is expected to accelerate the pace of contract awards, which, in turn, will be beneficial for SAIC’s top-line growth.
Macroeconomic and Competitive Challenges
Science Applications operates in a highly competitive defense, space, intelligence and mission-critical services market that consists of players, including CACI International (CACI - Free Report) , KBR Inc. (KBR - Free Report) and Leidos Holdings (LDOS - Free Report) .
CACI, KBR and Leidos also receive contracts from the Department of Defense, the Department of Homeland Security and other U.S. government agencies, causing a highly competitive environment in this niche industry. The pricing pressure causes low-margin government deals affecting SAIC’s profitability.
Science Applications is also facing headwinds from rising component costs and increasing labor and logistics expenses. Moreover, recession concerns amid the ongoing macroeconomic and geopolitical tensions might lead to softened spending by government agencies. The company’s near-term prospects are weighed down by these negative factors.
Conclusion
Science Applications is receiving a steady flow of deals from government agencies. However, most of these contracts have low margins, which affects its profitability. Intensified competition and softened customer spending amid uncertain microeconomic conditions are other concerns.
Science Applications carries a Zacks Rank #3 (Hold) at present. Shares of SAIC have lost 0.6% compared with the Zacks Computer - IT Services industry’s decline of 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.